CMM CMM Financial Management & Budgeting

Question 1

Which budgeting approach requires each department to justify all expenditures from a base of zero each fiscal year?

Accepted Answer

Zero-based budgeting

Answer

Line-item budgeting

Answer

Incremental budgeting

Answer

Performance budgeting

Question 2

What is the primary purpose of a municipal general obligation bond?

Accepted Answer

To borrow money backed by the full faith and credit of the municipality

Answer

To fund enterprise funds through user fees

Answer

To finance operations without voter approval

Answer

To create a revolving loan fund for businesses

Question 3

Under GAAP for governmental entities, which fund type is used to account for activities supported primarily by taxes and intergovernmental revenues?

Accepted Answer

General fund

Answer

Enterprise fund

Answer

Capital projects fund

Answer

Debt service fund

Question 4

What does a fund balance reserve for 'rainy day' purposes typically represent in municipal finance?

Accepted Answer

Unrestricted reserves to stabilize budgets during revenue shortfalls

Answer

Money set aside for flood insurance premiums

Answer

Designated funds for capital equipment replacement

Answer

Restricted grants from FEMA for disaster recovery

Question 5

Which financial statement provides a snapshot of a government's assets, liabilities, and net position at a specific point in time?

Accepted Answer

Statement of net position

Answer

Statement of revenues, expenditures, and changes in fund balances

Answer

Statement of cash flows

Answer

Budget-to-actual comparison schedule

Question 6

What is the purpose of an appropriation ordinance in municipal budgeting?

Accepted Answer

It legally authorizes the spending of funds up to specified amounts

Answer

It sets the property tax rate for the fiscal year

Answer

It approves the issuance of revenue bonds

Answer

It establishes salary schedules for city employees